Believe it or not we're seeing some new entry points given the market's recent action.
DE, TEX, and UYG all hit our stop this past week.
ACI $21.08 +0.20 -- Arch Coal Inc.
After a very rough week for the markets shares of ACI gained a penny for the week. Shares appear to have found some support north of $20.00 and its 200-dma. ACI was even downgraded to a "sell" last week and shares didn't break down. This is a good sign for us. While I am certainly tempted to buy call LEAPS on this dip it might be a better bet to wait for signs of a bounce first. Shares have immediate resistance overhead with the 50-dma and the $24.00 level past that.
Our exit strategy hasn't changed. We want to sell the final half of this trade at $34.75.
May 14th, 2009 - entry price on ACI @ 16.00, option @ 2.40
symbol: OSE-AF, 2011 JAN $30 LEAP call - current bid/ask $1.15/1.30
-stop loss on ACI @ 18.99
Chart of ACI:
CHK $24.52 +0.34 -- Chesapeake Energy Corp.
The market correction and the weakness in commodities has pulled CHK down toward technical support at its 200-dma. I've been warning readers to expect a dip toward $24.00. CHK fell to $23.56 on Friday. I'm optimistic that CHK will see an oversold bounce from here the short-term trend is still down. This is technically an entry point but I would use relatively tight stops under Friday's low. Keep in mind that CHK is due to report earnings around Feb. 17th. Our long-term target is $40.00.
Oct 30th, 2009 - entry price on CHK @ 24.00, option @ 4.70
symbol: VEC-AE, JAN 2011 $25 LEAP call - current bid/ask $3.70/3.80
-stop loss on CHK @ 20.95
Chart of CHK:
CNX $46.05 +0.83 -- Consol Energy Inc.
I have been expecting a dip toward support near $42.50 and its 200-dma. Yet traders bought the dip at $44.00 - twice (intraday on Friday). I would rather buy call LEAPS on a dip or a bounce near $42.50 but more aggressive traders could launch positions here.
Currently we have a second target to take profits at $58.50. We have a third and final long-term target at $64.90.
Sep 1st, 2009 - entry price on CNX @ 36.50, option @ 7.80(estimate)
symbol: VTL-AH, 2011 JAN $40 LEAP call - current bid/ask $11.50/11.90
-stop loss on CNX @ 41.45
1st Target hit 09/16/09 @ 48.50, option price $15.40 (+97%)
Chart of CNX
EMR $45.15 -0.12 -- Emerson Electric Co.
EMR reported earnings last week. The results were good. The company beat earnings estimates by 14 cents with a profit of 56 cents a share. Revenues were $5.01 billion versus $4.69 billion. Management guided fiscal year 2010 higher. Investors reaction sent the stock soaring to new 52-week highs near $47.00. EMR has since pared its gains but the trend is still up.
I am not suggesting new positions at this time.
Our plan is to sell half of our position at our original target of $47.50. We'll sell the rest at $54.50.
Please note our new stop loss at $39.75.
Sept. 8th, 2009 - entry price on EMR @ 38.00, option @ $4.50
symbol: VHH-AH, 2011 JAN $40 call - current bid/ask $7.10/7.40
-stop loss on EMR @ 39.75
Chart of EMR:
FST $23.98 -0.49 -- Forest Oil Corp.
I am a little surprised that FST hasn't shown more weakness. Commodities have been getting crushed by the strength in the dollar. Energy stocks have been a big part of what's leading the market lower. While FST has corrected the trend is still up. Traders bought the dip at its rising 50-dma on Friday, which is exactly what we were expecting. Aggressive traders may want to consider new bullish positions here. I have a suspicion that FST may see $22 or even $20 before this correction is all over. Consider waiting for a lower entry point. Our long-term target is $37.50.
Oct 15th, 2009 - entry price on FST @ 23.85, option @ 7.40
symbol: OJG-AD, 2011 $20 LEAP call - current bid/ask $6.70/7.00
-stop loss on FST @ 19.49
Chart of FST:
INTC $19.47 +0.45 -- Intel Corp.
Believe it or not INTC gained seven cents on the week. I will admit Thursday looked pretty ugly with a big drop toward $19.00 and its exponential 200-dma. Traders did buy the dip for now. Unfortunately the short-term trend is still down and Friday's session produced an "inside day" so there's not decisive turnaround yet. If the correction continues INTC should have additional support at the simple 200-dma near $18.60. I am not suggesting new positions at this time but with our stop loss at $17.90 I could see buying call LEAPS on a dip or a bounce from the 200-dma.
Our long-term target is the $24-26 zone.
June 13th, 2009 - entry price on INTC @ 16.31, option @ 1.36
symbol: VNL-AD, 2011 LEAP $20 call - current bid/ask $2.02/2.07
-stop loss on INTC @ 17.90.
Chart of INTC:
MOS - Mosaic Co. $55.18 +1.17
Attention! This could be another entry point in MOS. The rest of the market may have been sinking to new lows but MOS managed to hold its lows from last week. Traders bought the dip on Friday and the move now looks like a potential short-term bullish double bottom. I am suggesting readers buy call LEAPS on this bounce. If you prefer to see some momentum first then wait for a move over the 50-dma or the $60.00 level but I am suggesting positions now.
Our stop loss is unchanged at $49.00. More conservative traders may want to consider a stop loss closer to $52.00-52.50ish.
Our long-term target is the $90-100 zone. (Readers might want to consider the 2012 LEAPS too).
FYI: There could be some stock-moving news this week. Several companies in this industry, including MOS, will be presenting at an analyst/investor conference on Feb. 10th.
NOTE: In 2009 MOS issued a special cash dividend of $1.30 per share payable back on December 3rd, 2009. The CBOE issued a new LEAPS symbol to account for the dividend. The old 2011 LEAPS have a root symbol of ZHX. The LEAPS we want to use are the ZXW root symbols.
Jan 28th, 2010 - entry price on MOS @ 56.00, option @ 6.10
symbol: ZXW-AM, 2011 LEAP $65 call - current bid/ask $5.95/6.30
-stop loss on MOS @ 49.00
Chart of MOS:
MTW $10.85 -0.42 -- Manitowoc Inc.
Readers may want to consider raising their stops on MTW. Shares only lost 5 cents on the week but the action was bearish. The company reported earnings on Feb. 3rd and disappointed the market by missing estimates by nine cents. Revenues were also a miss. Management essentially said business would be less bad in 2010. The stock produced a failed rally at $12.00 on the earnings news. The breakdown under $11.00 and its 50-dma is short-term bearish.
I am not suggesting new bullish positions at this time. Odds are growing that MTW could see a correction toward $10.00 and possibly historical support near $9.00. I am leaving our stop at $8.95 for now. You may want to raise your stop. Our long-term target is $17.00.
Oct 30th, 2009 - entry price on MTW @ 9.10, option @ 2.61
symbol: VMT-AB, 2011 JAN $10 call - current bid/ask $2.70/2.90
-stop loss on MWT @ 8.95
01/18/10 Sell Half! MTW @ 13.70, option at $4.80 bid.
- or -
Oct. 30th 2009 - entry price on MTW (the stock) @ 9.10
- stop loss on MTW @ 8.95
01/18/10 Sell Half! MTW @ 13.70
Chart of MTW:
ORCL $23.55 +0.44 -- Oracle Corp.
ORCL managed a gain on the week. The stock was upgraded a few days ago and given a $30 price target. Shares have essentially been consolidating sideways above support near $23.00. I am encouraged that ORCL did not close under $23.00 during last week's market weakness. However, if the market does not see any follow through from Friday's bounce we can probably expect a dip toward $22.00 and its 200-dma for ORCL.
I would consider buying calls here near $23.00 but readers may want to wait for a new close over $24.00 (or that dip near $22.00).
Be patient about opening new bullish positions.
Our stop loss is at $21.40. Our long-term target is $29.75.
FYI: Shares of ORCL don't move very fast. Readers might want to consider turning this play into a calendar or diagonal spread to further maximize your gains.
Dec. 18th, 2009 - entry price on ORCL @ 24.05, option @ 2.55
symbol: VOC-AE, 2011 LEAP $25 call - current bid/ask $1.99/2.03
-stop loss on ORCL @ 21.40.
Chart of ORCL:
PEP $59.51 -0.13 -- PEPSICO Inc.
Shares of PEP tried to bounce again but it failed midweek. The stock is back to testing technical support at its exponential 200-dma. Nothing has changed for us. I'm still very concerned that PEP is poised for a larger decline. It's not too late to buy some protective puts (listed below). Keep in mind that PEP is due to report earnings on February 11th. If you're going to buy puts do it before earnings.
I am not suggesting new long-term LEAPS at this time. Our exit target is the $69.90 mark.
July 7th, 2009 - entry price on PEP @ 57.25, option @ $4.50(estimate)
symbol: VP-AL, 2011 $60.00 LEAP call - current bid/ask $4.15/4.25
-stop loss on PEP at $54.95
Temporary protective put:
Jan. 23rd, 2009 - entry price on PEP @ 60.39, option @ 0.50
symbol: PEP-OK March $55 put - current bid/ask $0.51/0.54
Chart of PEP:
POT - Potash Corp. $103.48 +1.59
The situation in POT is the same as MOS. The stock has bounced near last week's low. The move looks like a short-term bullish double bottom. I see it as a new bullish entry point to buy call LEAPS. If you don't want to buy them here then consider waiting for a move over $110 or the 50-dma. More conservative traders may want to use a tighter stop near $95 or near the January low of $98.27. Our long-term target is $160 or higher.
Jan. 28th, 2010 - entry price on POT @ 101.00, option @ 11.75
symbol: VPT-AB, 2011 LEAP $110 call - current bid/ask $13.95/14.30
-stop loss on POT @ 89.00.
Chart of ORCL:
RAI $52.00 -1.51 -- Reynolds American Inc.
Warning! RAI has produced a very clear breakdown. The stock has been consolidating sideways in a narrow range for weeks and weeks. The company reported earnings on February 4th and investors sold the news. RAI missed Wall Street's estimate by six cents with a profit of $1.10 a share. Revenues were slightly above estimates. Management guided future earnings in line with estimates. It looks like normal profit taking. Unfortunately it's also a bearish breakdown under the 50-dma for a stock that's been overbought for a long time.
More conservative traders may want to take profits immediately! I am not suggesting new positions. There is a very real risk that we could get stopped out at $49.45 this week.
Our final target is $57.50.
July 24th, 2009 - entry price on RAI @ 42.50, option @ $4.50(estimate)
symbol: OWO-AH, 2011 JAN $40.00 LEAP call - current bid/ask $11.30/12.40
-stop loss on RAI at $49.45
Sold Half on 10/19 @ 49.50, option @ $8.90 (+97%)
Chart of RAI:
TBT $46.99 -0.13 -- UltraShort 20+ Year Treasury Bond ProShares
Our bearish trade on bonds (TBT and TLT) is not panning out for us. The idea was that the U.S's ballooning deficits and debt would push rates higher as investors demanded more reward for their risk of holding U.S. debt. Unfortunately, we didn't factor in a potential meltdown in Europe. The debt default scare in Europe is pushing money into the perceived safety of U.S. bonds. This scenario could go on for weeks and months.
I do not have much faith that the situation in Europe will be solved painlessly. That puts us at risk. I am raising our stop loss on the TBT to $45.90. If we get stopped out I'll put the TBT back on our watch list for a new opportunity down the road. I am not suggesting new positions at this time.
Our first long-term target is $59.75. Our second target is $67.50.
FYI: The TBT is an exchange traded fund (ETF) that tries to deliver twice the inverse performance of the Barclays Capital 20+ Year U.S. Treasury index.
Jan. 09th, 2010 - entry price on TBT @ 50.63, option @ 4.90
symbol: XRJ-AC, JAN 2011 $55 LEAP call - current bid/ask $2.92/3.20
-stop loss on TBT @ 45.90
Jan. 09th, 2010 - entry price on TBT @ 50.63, option @ 7.90
symbol: YHT-AH, JAN 2012 $60 LEAP call - current bid/ask $6.05/7.75
-stop loss on TBT @ 45.90
Chart of TBT
TLT $91.98 +0.20 -- iShares 20+Yr Bond ETF
We are facing the same troubles in the TLT as we are with the TBT except in the opposite direction with the TLT poised to move higher. This ETF is ready to rally toward the next level of resistance near $94 and its 200-dma. I am suggesting more conservative traders adjust their stop loss down to $92.65 so they'll be taken out if TLT rallies much further. I am adjusting the newsletter's stop loss down to $94.15. I am not suggesting new bearish positions at this time.
FYI: The TLT is an exchange traded fund that tries to mimic the performance of the Barclays Capital U.S. 20+Year Treasury Bond Index.
Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 6.40
symbol: VJL-MG, JAN 2011 $85 LEAP put - current bid/ask $4.10/4.40
-stop loss on TLT @ 94.15
Jan. 09th, 2010 - entry price on TLT @ 89.29, option @ 8.90
symbol: YLI-MB, JAN 2012 $80 LEAP put - current bid/ask $5.90/7.10
-stop loss on TLT @ 94.15
Chart of TLT
UNH $32.54 +0.08 -- UnitedHealth Group Inc.
UNH has been trying to hold short-term support near $32.00. I suspect that it will fail and UNH will once again dip toward stronger support near $30.00. Wait for that dip or a bounce near $30 before launching new positions.
The plan was to use small positions to limit our risk.
Our long-term target is $42.50.
Dec 16th, 2009 - entry price on UNH @ 31.55, option @ 3.80
symbol: VUH-AG, 2011 JAN $35 LEAP call - current bid/ask $3.70/3.80
-stop loss on UNH @ 28.95
Chart of UNH:
VICR $ 8.38 +0.31 -- VICOR Corp.
VICR is providing an entry point. We've been waiting for a dip toward support near $8.00 and we got it. Not only that VICR delivered a nice bounce from $8.00 on Friday and did not breakdown under this level. I am suggesting new positions now. More conservative traders may want to use a stop loss closer to $8.00.
Our twelve-month target is the $13.50-14.00 zone (one reason I prefer the stock over the option). Remember, if the market dips in January VICR will probably dip with it.
Dec 26th, 2009 - entry price on VICR@ 9.30, option @ 1.40
symbol: VQV-GB, 2010 JUL $10 call - current bid/ask $0.40/0.70
-stop loss on VICR @ 7.45
- or -
Dec. 26th 2009 - entry price on VICR (the stock) @ 9.30
-stop loss on VICR @ 7.45
Chart of VICR:
DE $49.82 -0.05 -- Deere & Co.
Shares of DE only lost 13 cents on the week but Friday's intraday decline was enough to tag our stop loss at $48.45 and close this trade. I still think DE offers potential and I'm putting it back on my personal watch list for a bounce near its simple 200-dma near $46.00 or a breakout above its 50-dma.
Nov 18th, 2009 - entry price on DE @ 51.00, option @ 8.75(estimate)
symbol: VER-AJ, 2011 JAN $50 LEAP call - current bid/ask $ 6.75/ 6.90
-stop loss on DE @ 48.45
02/05/10 STOPPED OUT, DE hit our stop at $48.45.
Estimated exit on the option at $6.25 (-28.5%)
Chart of DE:
TEX $18.14 -0.46 -- Terex Corp.
The ugliness continues in shares of TEX. The stock plummeted this past week with shares plunging to $17.32, under its simple 200-dma, on Friday. Our stop loss was hit at $17.75. TEX has suffered a huge amount of technical damage. Even if shares did bounce I wouldn't trust it.
Sept. 11th, 2009 - entry price on TEX @ 18.25, option @ 4.10
symbol: VXQ-AD, JAN 2011 $20 LEAP call - current bid/ask $2.80/3.00
-stop loss on TEX @ 17.75
Sell half (10/24/09), option at $7.50 (+82.9%)
Stopped Out (02/05/10), estimated exit @ $2.75 (-32.9%)
Chart of TEX:
UYG $5.23 +0.11 - ProShares Ultra Financials (2x) ETF
The market's sell-off on Thursday was enough to send the DJUSFN index lower and that pushed the UYG through our stop loss at $5.30 closing this trade. If the UYG closes under $5.00 it might be a bearish candidate.
FYI: The UYG trades off the DJUSFN index.
Our strategy called for buying the ETF instead of the options.
Current position in the UYG = $1.50 entry (stop loss: 5.30)
10/14/09 Exit - Sell Half @ 6.31 (gap open exit, +320%)
02/05/10 Stopped out @ 5.30 (+253%)
Chart of UYG: